Commentary

Consultancies' Impact is Exaggerated... For Now

When WPP releases results, you always know the business pages will be either ringing alarm bells about adland and the economy or praising some great figures while rebuking Sir Martin Sorrell on the size of his pay packet.

This latest quarter has seen a new twist, however. Earnings remain flat -- and to be honest, it's not surprising, given the way the huge ad spenders are beginning to rein in budget and cut down on rosters, "sweating" assets to make them work harder and for longer. Not a week goes by without a story or piece of research revealing how more brands are bringing parts of their marketing or advertising efforts back in-house, particularly programmatic. 

So flat revenue was to be expected -- what might not have been foreseen was WPP firing a broadside against the consultancies. Clearly, inaccurate reporting at a well-known advertising publication had annoyed Sir Martin, prompting the quarterly figures to redress the notion that the consultants are winning big accounts. WPP's statistics show that it has won far more pitches against consultancies than it has lost, and that earnings for the major holding companies actually far outstrip those of the consultancies. 

The point is well made, and today in Campaign, analysts are queuing up to agree with WPP. The threat from the consultancies has been overplayed, they say.

I think they're right, but I also think they are talking about a freeze frame -- a particular moment in time. If you widen your scope a little, I think the holding companies do actually have something to be scared of in the form of the consultancies. 

Nearly everything anyone says in marketing and advertising today concerns data. Every CMO interview will talk about how brands want to get a single view of an omnichannel customer and orchestrate a consistently engaging experience across devices -- you know the cut and copy quotes that usually go into each of these interviews. 

So, if you ask whether any CMO is going to wake up tomorrow and think they need a tv campaign and so need to get Accenture on the phone, the answer is almost certainly no.

However, just think about the data integration needed to get a single "360" view of the customer. Just think about the compliance that is required with GDPR's introduction looming large in May. Just think of a CRM system that drives a loyalty project to know how people are behaving in stores and how this translates into online behaviours.

I honestly don't have any privileged insight into who is driving these decisions, but I would wager it's not just the CMO. You've probably got the CIO in there, with a CTO and even COO with the chief data officer, where applicable, also playing a role.

What I do know is that those other C-level positions are usually those who talk to consultants. The CMO and agency relationship is strong, but who's to say brands, going forward, are going to build data capabilities through the CMO, rather than one of his or her colleagues. These people will see data as a tech capability that serves marketing and advertising and so doesn't automatically need to be handled by an agency. A tech consultancy can do all the clever data stuff, but they can also set up the systems to get the most out of this and to buy the inventory needed to get a campaign across.

The consultancies, for me, are in an interesting area -- and that may well be one of the reasons that WPP decided to shoot a torpedo across their bows this week. Sure, their impact has almost certainly been exaggerated so far. But if data truly is the new oil, that's a lot of tech and IT know-how that will be needed moving forward, and I wouldn't be at all surprised if that means the consultancies are in a far stronger position within the next five years. 


 

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